The new Pledge Act: introduction of a non-possessory pledge and extension of the retention of title

The new property law came into force as from 1 January 2018 (the act of 25 December 2016 establishing the amendment of various provisions with regard to the collateral on moveable assets, Belgian Official Journal 30 December 2016). This makes it easier to set up a pledge on moveable assets thanks to the introduction of a Pledge Register and it extends the effect of retention of title.

Non-possessory pledge and Pledge Register
A pledge on moveable assets (other than when it involved a pledge on the business) was only possible by physical dispossession of that asset. This meant that such a pledge was not always easily applied. From now on, thanks to the new Pledge Act, a pledge can simply be established in a contract on moveable tangible assets (contents, stock, machines,…), moveable intangible assets or on a universality (the business as a whole). It is no longer necessary to effectively dispossess the assets. Every creditor-pledgee can register his pledge rights in the Pledge Register after authentication with his E-ID and upon paying a fee.

As from the date of registration, the pledge right shall be enforceable to third parties and is of importance when handling conflicts of rank between various pledgees. Specifically, this means that a third-party buyer of a pledged asset must respect the rights of the creditor-pledgee so that this party can be held liable by the pledgee-creditor, unless the third party buyer acquired the asset in good faith without any knowledge of the registered pledge. A third-party buyer operating on behalf of his profession or company may not claim ignorance and must therefore always check the Pledge Register. Later amendments, updates, transfers, rank waiver or termination of the pledge must be recorded in the Pledge Register and are freely accessible.

The registration fees are (depending on the secured liabilities):

  • between 20 and 500 EURO for the registration of a retention of title for a pledge or its renewal in the Pledge Register;
  • between 12 and 300 EURO to amend the registration of a pledge right or retention of title in the Pledge Register;
  • between 8 EURO and 200 EURO for the complete removal of the registration of a pledge right or a retention of title in the Pledge Register;

and

  • 10 EURO for the registration of a rank or transfer of a pledge.
  • 5 EURO for a consultation per search in the Pledge Register. 

Greater security in retention of title
Retention of title is an agreement between parties on the basis of which the ownership of an asset is transferred only upon full settlement of the price. Until now, the retention of title was only partly established by law for a sale-purchase in the case of bankruptcy, whereby a seller was sometimes left with empty hands. The legislator has now clearly decided on general and extensive legislation. So from now on it is so that:

  • the retention of title may be invoked for agreements covering (e.g.) purchase - sale, exchange, adoption, mandate or contribution;
  • this shall apply both in the case of a bankruptcy, collective debt collection scheme, settlement or other overlapping cases;
  • provision is made for a resale right: the retention of title not only applies to the asset itself, but also to all liabilities attributable from the asset or coming in its place, and may be transferred to the assets in which the original asset has been incorporated;
  • the retention of title must be recorded on a written basis at the latest before the delivery (in the sales agreement or relevant general terms and conditions). If the buyer is a consumer, then prior and express agreement is required from the buyer.
  • registration of the retention of title in the Pledge Register is possible upon payment of the aforementioned fee. Registration in the Pledge Register is particularly important to protect the pledge right from the rights of the mortgagee when the moveable asset concerned is part of (incorporated in) an immoveable asset. 

Conclusion
Thanks to the new Pledge Act, creditors will gain better and more efficient tools to secure their liabilities. From now on it will be key in the case of (important) transactions to first consult the Pledge Register and, when establishing a pledge or retention of title, to register this in good time in the Pledge Register.

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